Short hair Catra looks a lot more mature, since she doesn't have the wild poofy mane behind her, and I think it works well to illustrate that she's literally carrying less weight on her shoulders.
The creators made the character in response to a question posed by a fan of what Adora and Catra's kid would be like, is the short answer. Whether or not that makes it canon is debatable.
She hasn't confirmed this is actually her, but given that it meets all the hints she's given, and the writer hasn't written anything else before or since, even after getting a billion views, means it's most likely this one.
Most of the ships in Overwatch are pulled from a hat. PharMercy is almost entirely because they make an effective combo with Pharah's jets and Mercy's glide and tether. I'm still waiting for my Orisa X any other character ship